eProcurement Strategy

1
National e-Procurement Strategy Challenges in
Implementation
Realization of the e-GP Vision Role of e-Bharat
S. Abbasi Director Department of Information
Technology Government of India
PwC
November 28, 2006
2
e-Bharat Inclusion of e-Procurement as MMP

• Government procurement estimated at Rs. 450,000
  crore p.a.
• Public Procurement Policy
• Lack of standardization in implementing
  procurement processes
• Low efficiency manual process,
  tracking/monitoring of order fulfillment
• Transparency in procurement Priority Agenda
• Lack of information on procurement spend at
  different levels
• Multiple Registration for vendors by every
  department
• No performance tracking for vendors

3
Trends impacting public procurement

• Growth in electronic delivery of government
  services
• Increased outsourcing
• Increased procurement of services human capital
  vs. goods
• Productivity gains using IT solutions
• Increased purchasing leverage while enabling
  decentralization of procurement
• Increased expectations for quality and timeliness
• Increased budget pressures
• Internationally e procurement being adopted\

4
E Procurement State of Play

• DG SD has developed a e procurement solution
  which is available to all Central Ministries
• 11 Services being provided
• NIC has also recently developed a e procurement
  solution
• Currently being tested would be made available
  to State Governments Central Ministries
• Some States a number of CPSUs doing e
  procurement
• CVC has issued an advisory that e procurement for
  all major procurements would be done from 1-4-07

5
E Procurement State of Play

• As per Apex Committee direction, advisory issued
  by DoE to all FAs to fix thresholds above which e
  procurement would be mandatory
• Compliance of the advisory being monitored
• 1st Jan 07 to be fixed as date from when all
  procurements would be done electronically by
  Central Ministries CPSUs
• States would also be requested to adopt e
  procurement

No Clear Definition of e Procurement
6
e-Procurement Value Chain/ Definition
e-Auctions
Require centralization
Contract Management
May / may not be centralized
Indent Management
e-Tendering
Catalogue based Procurement
Vendor Management

• e-Procurement system is centralized with
  individual procuring departments/agencies having
  ownership of the procurement process
• Value in centralizing e-Tendering (incl. Bid
  Process Management), e-Auctions, Catalogue-based
  Procurement and Vendor Management
• Contract and Indent Management can be kept at
  individual departments discretion

Expected Outcomes from e-Procurement
7
Policy Issues (1 of 2)

• A clear definition of what constitutes e
  procurement/ stages of e procurement
• Legal acceptance of electronic means of
  procurement
• Dealing with independent departmental
  e-procurement initiatives
• Use of PPP option for addressing issue of high
  initial capital investment and to ensure high
  service levels
• Extension of NICs/ other e-procurement solution
  as a centralized system to other government
  deptts / agencies
• Need for re-engineering of certain government
  processes to enable e-procurement
• Willingness of states to embrace e-procurement
  and to what extent
• Prevalence of parallel manual process

8
Policy Issues (2 of 2)

• Need for high-level government guidelines for
  e-procurement addressing
• Level at which e-procurement effort should be
  centralized (state / national)
• Roles and responsibilities of vendors and
  government
• User adoption change management by both
  internal (government) and external (vendors)
• Security and audit requirements (for data
  transactions)
• What is required is a manual on e procurement

9
Vision is a compelling image of an achievable
future - Adapted from Laura Berman Fortgang
THANK YOU!
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e-Procurement Value ChainIndent Management

• The workflow involved in preparation of tenders
  is handled
• This module is optional in the e-procurement
  value chain with individual procuring departments
  defining their indenting process
• In works procurement, administrative approval and
  technical sanction are obtained in an electronic
  format
• In goods procurement, indent generation activity
  is done online
• The end-result of the stage is taken as inputs
  for issuing the NIT
• Interactions in this module happen among
  government personnel

11
e-Procurement Value Chaine-Tendering

• Online Bid Process Management from publication of
  NIT until the award of contract
• Download of tender documents, bids submission,
  opening of bids and publication of award notice
  are all done online
• Technical bid evaluation is typically handled
  manually automating the activity requires a
  well-functioning contract management and
  supplier management modules
• Most of the tendering activity is handled at the
  divisional level and above

12
e-Procurement Value Chaine-Auctions

• There are two types of auctions forward and
  reverse auctions
• In forward auctions, bidders quote such that
  price line goes upwards
• In reverse auctions, bidders quote such that
  price line goes downwards
• Reverse auctions hold relevance for government
  procurement
• Reverse auction is used in the government context
  mainly for purchasing standardized items
• Government many use forward auctions for selling
  excess items
• Auction may be used to select the L1 bidder after
  technically qualified bidders have been identified

13
e-Procurement Value ChainContract Management

• The module holds relevance to works procurement
  and electronically handles all processes involved
  in post-contract awarding phase
• Measurement book is maintained online and the
  workflow involved in making the payment to
  suppliers is also done online
• By integrating the contract management module
  with e-Tendering module, technical bid
  evaluation can be automated
• Requires IT infrastructure and networking
  capabilities at the sub-divisional levels
• Partial implementation of the module could be done

14
e-Procurement Value ChainCatalogue-based
Procurement

• Relevant for goods procurement (e.g. MRO items)
• Rate contract information is already posted
  online End users can place an order directly
  and goods are directly delivered to them
• Payment modalities remain the same as it is in
  the manual system
• Workflow involved in purchase authorization and
  payment is handled online
• Online tracking of rate contracts usage helping
  better vendor negotiations
• Requires good IT and networking infrastructure
  capabilities at the end-user level
• First step for most developed countries
  e-procurement initiatives

15
e-Procurement Value ChainVendor Management

• Maintains a database on the list of suppliers
  (incl. their infrastructure capabilities) found
  eligible to respond to government procurement
  tenders
• Blacklisting of suppliers is done in a
  centralized manner
• Information about projects previously undertaken
  and currently handled by suppliers is stored
  along with their performance data
• Customized module development required to suit
  the needs of government
• Supplier data digitization and timely information
  update is a challenge
• Inputs available in the module could be used for
  automating evaluation of pre-qualification
  criteria and technical-bid evaluation

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Expected Outcomes

• Enhanced transparency, monitoring and control in
  procurement process
• Reduced cost of doing business for both
  government and suppliers
• Documented savings of around 15-30 of
  procurement realized
• Wider competition leading to price benefits and
  better quality procurement for the Government
• Economies of scale through demand aggregation
• Greater access to past procurement information
• Streamlined integrated processes cutting across
  departments
• Catalyst for procurement reforms

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International Case Study
US Federal Government

• Managed Administered by GSA Federal Technology
  Services
• Uses the best technology available in the
  commercial space

Private Auctions (Reverse Auction)
eFast

• Real-time dynamic price negotiations
• Used for any procurement where price/performance
  tradeoffs can be easily evaluated

• Aggregation mechanism used for procuring
  commodities

Quick Quote

• Issue of RFQ and receipt of quotes
• Shopping cart feature - Ease of moving multiple
  items to private auction for procurement
• Used to procure complex hard to find services
  direct procurement goods

State of North Carolina, USA